The Monopolist's Cookbook

A TYRANNY OF STANDARDS

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D

efenders of Microsoft will often insist that if the company has succeeded in establishing software and operating system "standards," then these standards are set by the marketplace, and not by Microsoft, and certainly not in a deliberate effort to restrict consumer choice. Even Microsoft boasts that its ability to set "standards" for operating systems and software is one of the skills that has made them the successful company they are today.

Before considering the truth of this claim, an important distinction should be made: Microsoft is not so much a purveyor of standards, but of methods. Windows may be the predominant method of operating a personal computer, just as Ford may be the predominant automobile. Yet, no rational person would presume to call Ford the "standard" car, as though their method of designing and building a car had made all of the others obsolete and irrelevant. More accurately, Ford is arguably manufacturing cars in accordance with a method which is currently preferred by a plurality of consumers.

This is no small point. All cars, Fords and their competitors, are built to run on the same fuel, a fuel which works equally well in virtually all automobiles. Although the fuel formulas vary somewhat by the refinery and country, no gasoline pumps read "Ford Fuel Only." In this sense, the basic design parameters of gasoline are a standard. Likewise, car tires may vary in a number of important ways, but the size specifications themselves, and the principles of their design, are standardized.

Fortunately no company "owns" the concept of gasoline or car tires. It would be alarming to imagine these sorts of basic standards being set by one company, particularly if that company were already the dominant player in the marketplace, and was in the position to restrict competitive access to the marketplace by changing the standards at a whim.

But this is precisely the current state of affairs in the computer industry: what should be accurately regarded as methods are typically called standards. Not only are these methods fully proprietary in nature, but they are used by their owner to restrict competition to the fullest extent possible. So instead of standards which encourage competition and innovation within commonly held product definitions, we have standards wielded as bludgeons. What results is a tyranny of standards.

Perpetuating a Myth

Of all the nonsense we hear in the computer industry, the often-repeated need to accept these preordained "standards" is perhaps the most fundamentally damaging to the advancement of our interests as consumers. Every day, newspaper "advice columnists" or any of a thousand computer retail store clerks promote the "standard" operating system and the "standard" software.

When challenged, defenders of this narrow standards logic will invariably refer to the battle over formats in the home video cassette industry during the late 1970s. The VHS format, they point out, overtook the Beta format in popularity, not necessarily because it was a technically superior product, but because it was more successfully marketed. The next step in this logical chain is to insist that buying a computer driven by anything other than a Microsoft operating system is as patently foolish as buying a Beta VCR. Microsoft is the standard, so get with it!

This analogy is seductive in its simplicity, but on closer inspection proves to be a particularly poor fit. It begs a number of questions, including the question of who set the video tape standards in the first place.

As it happens, both VHS and Beta were invented by Sony, with the later refined and popularized by JVC. But take a close look at a VHS cassette or VCR today: Where are the copyright notices? Where is the evidence that JVC or Sony own this standard? Has it ever been changed, and by whom? In fact, once releasing it the marketplace, the inventors withheld little influence over its future, and the VHS standard emerged as an essentially public-domain specification.

Another point worth noting is that video tape standards are essentially invisible to the consumer. Yes, one format may be technically superior to another, but these differences are mainly in the margins. Most consumers would be hard pressed to distinguish between the functions of a tape machine or the quality of the screen image produced by Beta, VHS, or another format. As far as the consumer is concerned, the dominant standard is an essentially arbitrary thing. Unlike the VCR, the operating system of a personal computer defines its entire personality, including reliability, functionality, capabilities and ease of use.

It is also worth noting that the video market is still far from standardized on the VHS format. While VHS predominates in the home consumer market, Betacam is very much alive in professional recording studios, and the development of compact camcorders during the 1990s spawned the VHS-C, S-VHS and 8mm formats. All of these formats seem to somehow coexist side by side, each addressing their own segment of a diverse video market.

Tape formats may be a "standard" in the most orthodox sense of the word, but even so, one monolithic standard doesn't seem to exist. The relative openness in the handling of the tape format standards by the companies that invented them allowed the emergence of new standards that serve niche markets.

What would have been the outcome in the video market if JVC has shown the same inclination toward complete control the dominant tape standard exhibited by Microsoft in software? Much more of a monoculture marketplace then we have today, certainly. If anything, the tiresome, old video tape analogy lends support to the notion that free markets tend towards variety, not the conventional view that it proves that "one standard must prevail."

Because video tape standards are relatively less important in defining the personality of the product and consumer appeal compared to computers and software, we would expect the variety of consumer preferences expressed in computing to be much more like cars than VCRs. Ironically, just the opposite is occurring: we are well on our way to achieving less variety in the computer market than in the video tape market. How can this be?

This distortion is occurring because methods of operating computers are being enforced on the markets arbitrarily, mainly by dint of Microsoft active efforts to protect its dominant position by suppressing competing methods. The media and other "experts" frequently aid and abet this cause of promoting Microsoft's proprietary methods by erroneously calling them standards, and by disparaging the products of Microsoft's competitors, primarily for being "non-standard" (which is to say, non-Microsoft).

Owning the Alphabet

The common protocols of the Internet are traditionally set by international conferences and held in the public domain. But even these useful industry standards won't remain public and open for long if Microsoft has its way. Microsoft prefers standards it sets, owns and controls. For example, although Microsoft is promoting its "Active X" as an "open standard," Microsoft still retains ownership, and therefore control, of the technology. With this control comes the ability to change it at whim, and position its own Internet products to take advantage of these new changes before their competitors have access to them.

The consequences of handing control of telecommunications standards over to one company, especially one as disinterested in the public good as Microsoft, are beginning to become painfully apparent. Powered by Microsoft's installed base of operating systems and the blunderbuss distribution of its ActiveX-enabled web browser, Microsoft intends to establish ActiveX as the standard method of allowing users to engage in interactive Internet operations, such as banking and stock trading. But in typical fashion, Microsoft has shown a much greater devotion to gobbling up market share than any commitment to the comfort and protection of users.

Microsoft has been appallingly lax in paying attention to critical details of the ActiveX design. As a result, ActiveX allows a remote user to manipulate data on your computer, sometimes even without your knowledge or consent. According to Computerworld, "... ActiveX can access system resources on users' desktops, which can lead to security breaches or corruption of PC data." [Computerworld, 12.2.96, Vol. 30 No. 49, p. 139]

The security holes in ActiveX have also been demonstrated to be a shockingly effective method of engaging in Internet piracy:

In a staged appearance on German national television, members of the Chaos Computer Club of Hamburg demonstrated how an ActiveX control could effectively pilfer funds from one bank account and deposit it in another, with none of the clearances, like a PIN number, that are usually required. ... This specific demonstration ... added further proof of something that many Internet developers and publishers have been concerned about for some time: the inherent insecurity of ActiveX. [New York Times, 2.13.97]

Microsoft answers these charges with the claim that the so-called "Authenticode" system built into ActiveX will enable law enforcement officials to track down the thieves and miscreants who exploit ActiveX security holes for nefarious purposes. This explanation is unsatisfactory on two counts. First, it is a "solution" for a problem that should never have occurred in the first place, and it only allows the barn door to be shut after the horse has escaped. And second, it clearly provides no protection from computer criminals operating beyond the reach of international law.

But even the minimal level of security offered by Authenticode is of dubious value. The tiny InfoSpace Company recently demonstrated how easily this system can be defeated:

... [InfoSpace] created a program ... [that] manages to circumvent Explorer's security warning window--an action that could let InfoSpace sneak programs onto a user's personal computer without warning.

Although the InfoSpace program apparently was not created with malicious intent, it underscores the fragility of Internet Explorer's security defenses ... The InfoSpace program sidesteps a security feature in Internet Explorer, called Authenticode, which is designed to allow users to verify the origins of a piece of software code, such as an ActiveX control, a script, or a plug-in. [News.com, 23 Sept 96]

In short, the ActiveX "standard" is poorly designed and fraught with perils for the average computer user.

While Java applets are prevented from performing certain tasks such as erasing files from a user's hard disk, ActiveX controls ... are able to do virtually anything on a user's computer that a programmer can dream up, including installing a destructive virus. [CNET, 17 Feb 97]

In a free and open marketplace, it would be surprising to have such an obviously flawed standard generate much enthusiasm outside of the criminal community. But Microsoft, and Microsoft alone, has the leverage to foist this dangerously insecure standard on computer users worldwide, and in the process, transform the Web into a haven for banditry and sabotage.

Faced with the prospect of a standard they don't own, Microsoft moves to outflank and smother it. Sun Corporation's Java -- an open standard programming language intended to enrich the web for all users and provide many of the same functions as ActiveX -- is currently targeted for assault. According to PC Week, Microsoft has "made it clear that it wants control of Java ... [announcing] plans to release a native-code compiler for Java, letting developers create Java executables ... that run only on Windows." The logic is simple, cynical and pure Microsoft: as designed by Sun, Java committed the unforgivable sin of not being reliant on Windows for its existence. Microsoft intends to remedy this little flaw.

Standards can be beneficial for the industry and consumers, but only when they are safe, open, held in the public domain, and do not create arbitrary barriers to the introduction of new and competitive products. Microsoft has aligned itself against all of these principles.

Microsoft is applying its considerable will towards the goal of owning outright all of the fundamental, underlying methods -- what amounts to the entire backbone -- of computing and electronic commerce, and to compel each and every user of the products and services derived from them to pay them a royalty for the privilege. In effect, they are using ownership of these proprietary methods to levy an increasingly large and inescapable Microsoft tax on the public at large. With each passing day, this emerging hegemony over basic technologies becomes more analogous to private ownership of the alphabet.

Microsoft,and their often willing accomplices in the press, would prefer us to accept without question the falsehood that Microsoft's proprietary methods are in fact standards, and that the ownership of these standards by one company is somehow beneficial to the cause of innovation and choice. Instinctively, however, we know this "standards talk" is not benign -- it is meant to artificially limit our choices, and to cost us dearly, for now and into the foreseeable future. Why should we accept this reasoning when it is promoted by Microsoft, or anyone else for that matter?